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THE STRATEGIC MANAGEMENT PROCESS [How to Analyze a Case]

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THE STRATEGIC MANAGEMENT PROCESS [How to Analyze a Case] Dr. Ellen A. Drost Mgmt 497 COSTCO How to Analyze a Case Mission Values, goals, business model Current ... – PowerPoint PPT presentation

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Title: THE STRATEGIC MANAGEMENT PROCESS [How to Analyze a Case]


1
THE STRATEGIC MANAGEMENT PROCESSHow to Analyze
a Case
  • Dr. Ellen A. Drost
  • Mgmt 497

2
COSTCOHow to Analyze a Case
  • Mission
  • Values, goals, business model
  • Current Strategy
  • Strategic challenges, critical issues, current
    situation
  • Environmental Analysis
  • External General and Porter Five Forces Model
  • Internal Resources and Capabilities
  • SWOT Analysis
  • Recommendations

3
COSTCOMission and Objectives
  • What is Costcos business?
  • What is Costcos Mission?
  • What are Costcos Goals?
  • How do we reach our Mission?
  • Specific
  • Quantifiable
  • Time frame
  • Consistent

4
Costcos Mission
  • Mission Statement
  • To continually provide our members with quality
    goods and services at the lowest possible
    prices. C-9)
  • So, How is Costco going to accomplish its
    mission?

5
Costcos Business Model
  • What is Costcos Business Model?
  • Generate high sales volumes
  • Rapid inventory turnover by offering low prices
  • Limited selection of nationally branded
    merchandise categories
  • What are the elements of Costcos Business Model?
  • Operating efficiency
  • Volume purchasing
  • Efficient distribution
  • Self-service warehouse facilities (reduced
    handling of merchandise)

6
What is Costcos Business Philosophy?
  • The following five business principles C-19,-20)
  • Obey the law
  • Take care of our members
  • Take care of our employees
  • Respect our suppliers
  • Reward our shareholders

7
Mission Business Principles
  • What do Costcos mission statement and business
    principles tell you about the companys corporate
    culture?
  • What do Costcos mission statement and business
    principles tell you about the companys strategy?
  • How does Costcos corporate culture affect its
    strategy?

8
Costcos Business Principles
  • Has Costco followed its guiding principles (to
    help measure) to run its business?
  • Yes, by making Costco a great place to work. Look
    at some of its HRM practices
  • Selection
  • Compensation
  • Benefits
  • Do the practices match corporate values and
    business principles?

9
Costcos Strategy
  • What business are we in?
  • Does Costco offer additional businesses or
    services to its members? Banking, insurance,
    loans (3rd parties)
  • Business level single business
  • How do we compete in our business? What is
    Costcos Strategy?
  • Corporate level multiple businesses
  • What businesses are

10
Costcos Strategy
  • What is Costcos Business Level Strategy? How
    should we compete in our business?
  • low prices, limited selection, and a
    treasure-hunt shopping environment.
  • Generic strategy? Low-cost leadership

11
Elements of Costcos Strategy
  • What are the key elements of Costcos strategy,
    or how does Costco implement its strategy?C9-18)
  • Pricing
  • Product selection
  • Treasure-Hunt Merchandising
  • Growth Strategy
  • Increase sales by 5 or more annually
  • And open new warehouses, nationally and
    internationally C-14

12
Costcos Strategic Challenges
  • What are Costcos Strategic Challenges?
  • Sustain growth
  • How?

13
Industry Analysis
  • What industry does Costco compete in?
  • Porter Five Forces Model
  • Rivalry among competing firms
  • Power of substitute products
  • Barriers to entry
  • Economic power of customers
  • Who buys at Costco/ memberships here
  • Economic power of suppliers
  • Warehouse operation, here

14
Industry Analysis competitionFive Forces Model
PotentialEntrants
Buyers
Rivalry
Suppliers
Substitutes
15
Industry Analysis
  • Porter Five Forces Model
  • Rivalry among competing firms
  • Who are Costcos major competitors?
  • How strong is rivalry?
  • Are there many firms competing with Costco in in
    the warehouse retail market?
  • Power of substitute products
  • Are their any substitutes for the Costco
    experience?
  • Barriers to entry
  • What are the barriers to entry?

16
Industry Analysis
  • Porter Five Forces Model
  • Economic power of customers
  • How powerful is the customer?
  • Does the customer have many warehouse retailers
    to choose from? Brand loyalty?
  • Economic power of suppliers
  • How powerful are the suppliers? Are there many
    suppliers that Costco can choose from? How
    important is Costco to suppliers? Are suppliers
    interested in building a relationship with Costco?

17
SWOT Analysis
Strengths Brand recognition Corporate Culture Merchandizing Other? Weaknesses Narrow product line Other?
Opportunities International markets Product lines Other? Threats Competition
18
Recommendations
  • What would you recommend to Costcos executives
    as it relates to Costcos current position and
    challenges?
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